Vale aims to conclude contract renegotiation before end 2013

By Hiski Darmayana

IDX-listed nickel mining giant PT Vale Indonesia Tbk expects to be able to conclude the ongoing renegotiation talks with the government over its contract of work before the end of this year.

The renegotiation talks have been focused on six main points including share divestment, concession acreage, royalty, contract extension, domestic processing and refining obligation, and the obligation to use domestic goods and services in mining operations.

?Of the six main points, the discussion with the government has now centered only on one remaining item, which is the issue of divestment (obligation). The other five points have been concluded,? Vale Indonesia President Director Nico Kanter told Petromindo.com.

With regards to the share divestment obligation, Nico said that the government wants an integrated mining firm like Vale to divest up to 40 percent of its shares to Indonesian investors. ?But we have been operating (in Indonesia) for quite long, compared to other companies which have just emerged in recent years. And we have divested 20 percent shares to the public since listing on the Indonesia Stock Exchange. So, are we also included in the (list of) companies required to divest up to 40 percent shares? This is the issue that we seek for clarification from the government,? he explained.

Nico added that his company is quite optimistic that the government would soon conclude the ongoing renegotiation process. ?From our latest meeting with the government, we?re confident that the government will soon conclude this. So, in our opinion, the government is not slow,? he said.

Vale Indonesia holds a nickel concession with combined acreage of 190,513 hectares scattered in three provinces including Central Sulawesi, South Sulawesi, and Southeast Sulawesi. The company obtained the contract work in 1968.

Editing by Reiner Simanjuntak